A Yemeni money exchange firm on Wednesday denied being involved in funnelling money to Al-Qaeda in the Arabian Peninsula, a day after Washington slapped it with financial sanctions.

Al-Omgy and Brothers Money Exchange issued a statement dismissing the accusations as "false" and mere "rumours".

The US Treasury said AQAP had used the firm to make and receive payments throughout Yemen.

It said the company had also recently pledged to provide AQAP with a 10 percent commission on all of its transactions.

The US imposed sanctions on the company's two owners, Said Salih Abd-Rabbuh al-Omgy and Muhammed Salih Abd-Rabbuh al-Omgy, an alleged AQAP member.

Treasury said with the latest actions it had frozen any of the Yemeni company's US assets and blocked any transactions with it.

The United Arab Emirates' central bank had also recently taken steps to freeze the company out of the UAE financial system, the Treasury said.

In the statement, Said al-Omgy urged the Yemeni government to "demand a clarification from the UAE and the US Treasury" over the measures taken against the company.

The sanctions are part of Treasury efforts to cut off financing to the group and "degrade AQAP's capabilities to execute violent attacks," said senior Treasury official Adam J. Szubin.

AQAP was behind a number of attacks on US and Saudi Arabian targets, including in 2009 when a passenger aboard a US-bound flight tried to set off a bomb sewn into his underwear.

The US State Department designated AQAP as a foreign terrorist organisation in 2010.

Source: AFP